Home sales forecast to hit highest levels since 2006 this year

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Freddie Mac is forecasting that home sales, housing starts and house prices will reach their highest level since 2006 this year.

“Housing markets are poised for their best year in a decade,” said Sean Becketti, Freddie Mac chief economist. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation's housing markets should sustain their momentum from 2015 into 2016 and 2017.”

The forecast came in Freddie Mac’s monthly housing outlook report. Other highlights included:

Freddie Mac expects the 30-year mortgage rate to remain “very attractive” through the homebuying season, staying under 4% until the latter half of the year.

Freddie forecasts that combined single-family and multifamily housing starts will see an increase of 200,000 units to 1.3 million in 2016.

Freddie expects home price gains to continue, but mocerate somewhat from last year’s 6%. Annual house price appreciation is expected to slow to 4.8% in 2016.

Freddie has increased its forecast for total 2016 mortgage originations by $70 billion due to higher expected house prices. Freddie’s forecast now has total originations for 2016 at around $1.65 trillion.